Weekly Recap: Markets played out well as anticipated

The week in the hindsight, witnessed mixed US data releases and gold regaining USD 1200 mark for the first time in three weeks. Also, the US dollar finished the week lower despite a key US CPI and GDP data coming above estimates. In reference to the weekly review, all the three macro reports published last week turned out to be in line with the analysis and projections.

The first macro report titled “Technically USD/JPY is likely to test 100‐DMA at 118.75 on downbeat US economic data” published on March 24, was contingent on the US economic data coming out below estimates. However, the US macro data released including US CPI, manufacturing PMI and home sales numbers surprised the markets on the upside and beat market estimates. US CPI figures rose 0.2% for February, after declining 0.1% in Jan. The slight uptick last month ended a three‐month streak of declines. New‐home sales soared almost 8% in February while US manufacturing data recorded its highest reading since October.

As anticipated, the pair rebounded from lows around 119.20 levels and reached day’s high at 119.98 levels post US data, just shy of expected 120 levels. As noted in the report, “Conversely, if the US CPI, manufacturing PMI and housing data comes in line with expectations or beats expectations, USD/JPY is expected to rebound to test 5‐DMA located at 120 levels.”

The second report titled “Gold Analysis: Could rise to USD 1200 on dismal US data” published on March 25, also played out well as anticipated. The gold outlook was subject to weak US durables goods data release which eventually turned out as anticipated. The total durable goods orders, which include transportation items, declined by 1.4% in Feb, compared to expectations for a gain of 0.4%. Core durable goods orders, excluding volatile transportation items, inched down 0.4% in February, disappointing forecasts for a 0.3% gain and against a 0.7% decline in January.

The idea worked as anticipated and the yellow metal reached highs just ahead of 1200 mark, achieving the expected target of 1200 levels. Weak durable goods data from the US, eased expectations of an earlier interest rate hike boosting gold’s appeal as an alternative yielding asset.

Finally, the last report titled “USD/CAD Forecast: Likely to test 1.24 if US GDP disappoints” published on March 27 also fared well as the logic behind the idea worked and the pair bounced‐off the major support as anticipated. The US GDP grew at an annual rate of 2.2% in Q4 2014 and came in below predictions for an upward revision to 2.4% growth, although unchanged from its previous estimate in February. Hence the pair did not witness further losses and the support at 1.2460 levels emerged as a major reversal point. The pair rebounded sharply from that level and as anticipated pierced through 1.26 handle, scoring a high of 1.2623 levels.

As anticipated in the report, “if the US GDP figures come out in line with expectations or beat expectations, USD bulls may take charge and the pair is likely to pierce through 1.2500 levels and retest daily highs at 1.2530, beyond which the pair may shoot to 1.2600 levels.”